In decades past, turmoil in the Middle East would send crude oil prices soaring, pushing up the cost of gasoline for drivers and incentivizing Louisian producers to boost their output.Â
But while global oil prices rose after Israel attacked Iran’s nuclear facilities earlier this month and Iran retaliated, they didn’t stay high for long.
In fact, on Tuesday, the U.S. benchmark crude oil prices , lower than when the conflict began.
“What we’ve seen is that these geopolitical conflicts have actually had less and less of an impact on oil prices in recent decades,” said Greg Upton, executive director at LSU’s Center for Energy Studies.
One reason for that, Upton said, is the United States is much less dependent on foreign oil than it used to be.
Over the last two decades, the United States has seen an enormous increase in production, thanks to fracking technology that unlocked previously untapped oil and gas reserves.
That propelled the United States into , a position it's held ever since. In 2020, for the first time in 70 years, the U.S. also
“Twenty years ago, if we had the sort of things going on in the Middle East that are going on now, prices would be skyrocketing,” said Eric Smith, associate director of the Tulane Energy Institute.
“But people forget, 20 years ago, we didn’t have shale oil,” he said. “We were an oil importer, and now we export significant amounts of oil.”
Also helping to keep prices low are countries like Saudi Arabia and Russia, members of the OPEC Plus oil cartel, which have , in part, analysts say, to appease President Donald Trump, who promised to lower energy costs, including gas prices, for consumers.
Still, the conflict is far from resolved, and prices could spike again. Iran has threatened to shut down the Strait of Hormuz, , though that could alienate trading partners like China, which purchases the bulk of Iranian oil exports.
Before Israel struck Iran, U.S. oil prices were hovering around $65 a barrel. They rose to around $76 a barrel after the U.S. targeted Iran’s nuclear facilities last weekend. But after a ceasefire was announced on Tuesday, the price of West Texas Intermediate crude, the U.S. oil benchmark, retreated.
“You’ve seen a lot of volatility. That’s not surprising,” Upton said. “Uncertainty leads to volatility.”
Without a sustained increase in prices, oil producers in ¶¶Ňőh are unlikely to boost production, Upton said.
